Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting upward
C. Short-run aggregate supply shifting downward
D. Aggregate demand shifting leftward
Answer: B
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Because everybody lives under uncertainty, everybody is
A) less than perfectly informed. B) ignorant of something. C) a speculator. D) all of the above. E) none of the above.
At the beginning of World War II, a rationing system was established in the United States. Ration stamps or cards were issued for a variety of commodities such as canned milk and gasoline. Canned milk was only available to babies and small children
In this example, canned milk was allocated through A) personal characteristics. B) market price. C) majority rule. D) first-come, first-served.
If production of an item results in negative external costs, then
A) the market price is below the socially preferred price that reflects the external costs. B) the market price is above the socially preferred price that reflects the external costs. C) market forces will always correct the problem. D) the market quantity is too low from society's point of view.
Refer to the diagram. At P 3 , this firm will:
A. produce 14 units and realize an economic profit.
B. produce 62 units and earn only a normal profit.
C. produce 40 units and incur a loss.
D. shut down in the short run.